ABI

ABI TO DROP “CAUTIOUS” AND “BALANCED” Managed SECTOR LABELS to increase clarity for customers

ABI TO DROP “CAUTIOUS” AND “BALANCED” Managed SECTOR LABELS to increase clarity for customers

ABI TO DROP “CAUTIOUS” AND “BALANCED” Managed SECTOR LABELS to increase clarity for customers

The ABI today announced new names for its managed fund sectors, to help customers better understand how their savings are invested. The new fund sector names have been shaped using extensive consumer research and will replace labels such as “cautious” and “balanced”, which customers find confusing.

The ABI managed fund sectors contain almost 2,000 life and pension funds, worth an estimated £340 billion, approximately 80% of all money invested in managed funds.

ABI research showed that consumers want jargon-free titles for fund sectors that give them simple information about the minimum and maximum exposure to shares. Following consultation with stakeholders, the ABI has decided to replace risk-based labels with factual descriptions of the level of shares involved.

OLD Managed Sector names NEW Mixed Investment Sector names
Defensive (up to 35% equity) Managed Mixed Investment 0-35% Shares
Cautious (up to 60% equity) Managed Mixed Investment 20-60% Shares
Balanced (up to 85% equity) Managed Mixed Investment 40-85% Shares
Flexible (up to 100% equity) Managed Mixed Investment 60-100% Shares

Helen White, the ABI’s acting Director of Life and Savings, said:

“It was becoming increasingly clear that terms like “cautious” were confusing for consumers so the ABI was keen to act quickly and make changes to help customers. Our research of over 2,600 adults told us that the new names are significantly less likely to lead to consumers being misinterpreting the type of funds they choose to invest in.

“We found that consumers want simple information about the minimum and maximum amount of their money that an investment fund will put into shares. The new fund sector names do just that.”

The new sector names will apply from April 2011.

We will be issuing guidance to ABI members encouraging them to review their fund names during the year April 2011- April 2012.

The ABI will be publishing its consumer research into new sector names.

The sectors are not designed to indicate the level of risk of funds contained within and funds are not monitored on that basis

– ENDS –

Notes for Editors

Enquiries to:
Liz Forster 020 7216 7444 (Mobile: 07717 578 586)
Malcolm Tarling 020 7216 7410 (Mobile: 07776 147 667)
Erfan Hussain 020 7216 7411 (Mobile: 07712 841 184)
Kelly Ostler-Coyle 020 7216 7415 (Mobile: 07968 364 302)

The ABI completed their consumer research into new names in December 2010. This was followed by a consultation with stakeholders in January 2011. The majority of respondents to the consultation supported the changes. The consumer research will be published alongside the sector name change announcement.

The ABI is the voice of the UK’s insurance, investment and long-term savings industry. It has over 300 members, which together account for around 90% of premiums in the UK domestic market.
The ABI’s role is to:
Be the voice of the UK insurance industry, leading debate and speaking up for insurers.
Represent the UK insurance industry to government, regulators and policy makers in the UK, EU and internationally, driving effective public policy and regulation.
Advocate high standards of customer service within the industry and provide useful information to the public about insurance.
Promote the benefits of insurance to the government, regulators, policy makers and the public.

The UK insurance industry is the third largest in the world and the largest in Europe. It is a vital part of the UK economy, managing investments amounting to 24% of the UK’s net worth and contributing the fourth highest corporation tax of any sector. Employing over 275,000 people in the UK alone, the insurance industry is also one of this country’s major exporters, with a fifth of its net premium income coming from overseas business.
Insurance helps people and businesses protect themselves against the everyday risks they face, enabling people to own their own homes, travel overseas, provide for a financially secure future and run businesses. Insurance underpins a healthy and prosperous society, enabling businesses and individuals to thrive, safe in the knowledge that problems can be handled and risks carefully managed. Every day, our members pay out £155 million in benefits to pensioners and long-term savers as well as £58 million in general insurance claims.

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More news and information from the ABI is available on our web site, www.abi.org.uk.

Liz Forster
Assistant Director, Communications
ABI (Association of British Insurers)
t: 020 7216 7444
m: 07717 578 586
www.abi.org.uk

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